The Securities and Exchange Commission (SEC) has issued a new warning to investors about cryptocurrency related scams including investments in confusing cryptocurrency advisory and trading systems as well as cryptocurrency mining farms. Quite often these scams promise high guaranteed returns with little or no risk such as reflected in recent federal charges brought against two Nigerians accused of operating a fraudulent Bitcoin investment where they promised investors profits of as high as 50% without any risk or limitations. Although cryptocurrencies, such as Bitcoin, may seem to be new. I have been writing in Scamicide.com about cryptocurrency scams for four years. Cryptocurrencies are legitimate, but scammers are increasingly taking advantage of the public’s fascination with cryptocurrencies to take old forms of scams and update them with a cryptocurrency twist. The perception of many in the public is that cryptocurrencies offer an easy path to riches coupled with many people violating the cardinal rule of investing by investing in things that they do not understand creates a perfect storm for a wide variety of cryptocurrency scams.
According to the Wall Street Journal, federal regulators initiated 90 cryptocurrency fraud legal actions during the last two years and state regulators have filed an additional 70 cryptocurrency legal actions in just the last year. One of the biggest cases where both state and federal regulators have brought charges involves the company BitConnect which had a market value of 2.8 billion dollars before legal action was taken to put it out of business for violation of a number of state and federal regulations. Many investors were lured in by promises of profits of 120% annually. Promises of huge profits like this should always be a red flag to any investor.
A good example of what another type of cryptocurrency scam looks like can be found by going to this website touting HoweyCoins.
While HoweyCoins may appear to provide a lucrative investment opportunity, there is no such thing as HoweyCoins. It is a scam. Fortunately, it is a scam website that was set up by the Securities and Exchange Commission to serve as a warning to unwary investors about the dangers of cryptocurrency scams.
As I have mentioned many times previously, you should never invest in anything that you do not fully understand. Cryptocurrency scams quite often involve complicated language and investment terms that is purposefully unclear in an effort to confuse potential investors from understanding the real facts. You also should not invest in anything without investigating the people offering the investments. You can go to www.iinvestor.gov to learn about the licensing and registration status of someone offering to sell you investments. In addition, as always, if the investment sounds too good to be true, it usually is. Facebook for a time banned all advertisements promoting cryptocurrencies due to the plethora of cryptocurrency scams, but has reversed this position and now does accept ads for cryptocurrencies. Some of the things to be on the lookout for in regard to cryptocurrency scams are promises of high, guaranteed returns on your investment, false claims of being SEC compliant, allowing you to invest using your credit card and pump and dump scams. For more information about pump and dump scams related to cryptocurrencies, check out the Scam of the day for April 11, 2018.
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